The Hindu Business Line : Iron ore prices may rise further

Mumbai, Aug. 15 The iron ore market could be bracing for a price rise. China’s iron ore imports surged in July, rising by well over 20 per cent from the previous month.

This coincided with a rise in price. There is expectation of an increase in price of this raw material so crucial for the steel industry.

Rising freight rates have also contributed to the price spurt.

China imported 33.6 million tonnes (mt) of iron ore last month, according to Chinese customs data.

Imports regained their strength from this year’s lowest monthly imports of 26.9 mt in June.

While imports have been fluctuating, domestic stock build-up has been steady.

Bullish

Local iron ore user and traders in China are reportedly bullish on iron ore price increases this year and the next, analysts said.

Already, domestic iron ore spot prices have surged sharply over the past two weeks. Hebei 66 per cent iron ore fine surged by $9/t from the price two weeks ago to $112/t ex-VAT while the Indian 63.5 per cent iron ore reached $117/t cif and $85/t fob this week, compared with the prices of $108/t cif and $80/t fob two weeks ago, Macquarie Research Commodities said in a report.

Ocean freight rates rose strongly too. The Baltic dry index hit a new all-time high on Friday last.

Meanwhile, according to preliminary customs data, in July, China’s finished steel exports dropped by 5.8 per cent month-on-month to 5.94 mt.

Total finished steel exports from January to July amounted to 39.5 mt up 92.9 per cent year-on-year. For steel semi products, exports in July increased by 18.9 per cent month-on-month and 7.9 per cent year-on-year to 0.9 mt.

Over the past three months, the Chinese Government had introduced a series of policy changes to slow the momentum of steel exports. The above data however suggest that the policy changes have exerted very limited impact on Chinese steel export momentum.